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Consumer Insurance (Disclosure and Representations) Bill

The Consumer Insurance Disclosure and Representations Bill was introduced in the House of Lords on the  16 May 2011.

The bill is being brought to set into effect the “Consumer Insurance Law: Pre-Contract Disclosure and Misrepresentation” (Law Com No. 319; Scot Law Com No. 219) produced in 2009 and offer clarification to the duty of disclosure, pre-contract, of consumers as this is currently held to be different by the Marine Insurance Act 1906, the accepted legal basis, the opinions of the Financial Services Authority (FSA) and the differing opinion of the Financial Ombudsman Service (FOS).

Under the Act there has been a duty of disclosure by the customer to inform the insurer of any information that may be relevant, this or course does leave a considerable grey area for customers to interpret.

The new Bill seeks to remove the responsibility of the customer to provide such information as is not requested by the Insurer.

As suggested in the name of the Bill, the Act would apply to one particular class of customer, the “consumer”. This is defined as an individual, it cannot be a company or organisation, acting wholly or mainly for non-business purposes, private car insurance, home insurance, travel insurance and the like. There will be some policies with a business aspect drawn into this definition, working from home policies, annual travel insurance but refer to the “mainly for non-business purposes” for the reason behind this.

In truth, in practice this has been widely regarded by insurers and brokers as the situation already, Insurers have for some time been accustomed to relying on their “question set” for personal insurance contracts, and this does not appear to be so much of a change as a clarification.

Issues relating to the duty of disclosure for the “life assured”when not the policyholder are also examined, with some widening of the duty of disclosure in this instance.

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